Latvia: Taxes and Costs

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Rental income tax is high in Latvia

Effective Tax Rate on Rental Income
Monthly Income	€1,500	€6,000
Tax Rate	nil	nil
Click here to see a worked example
Source: Disclaimer

INDIVIDUAL TAXATION

Non-residents are taxed on their Latvian-sourced income. Married couples are taxed separately.

INCOME TAX

Non-residents earning income in Latvia are taxed at a flat rate of 25%. Non-residents are often taxed by withholding and are only eligible for allowances and credits available to residents if they are residents of EEA countries and are earning at least 75% of their income from Latvian sources. Income generating expenses may be deducted from taxable income.

Rental Income

Rental income is taxed at 25%, by way of assessment. Expenses incurred in the generation of rental income may be deducted from taxable income.

Capital Gains

Capital gains from the sale of real estate property, earned by a non-resident, are taxed at the ordinary income tax rate of 25%, if the property was sold to a non-resident or a private person.

If the property was sold to a Latvian company or an individual entrepreneur, tax is levied at a rate of only 2% on the selling price, withheld by the buyer.

Value Added Tax

Sales of newly built or reconstructed property are VAT taxable at 18%. This involves:

• Newly erected buildings
• Newly erected buildings sold within one year of the date on which the first user took possession
• Reconstructed buildings sold within one year after the completion of the refurbishment
• Incomplete structures

Refurbishment is defined as work that considerably improves the quality of the building or prolongs its useful life. Mere redecoration or minor repairs does not constitute refurbishment.

PROPERTY TAXES

Real Estate Tax

Real estate tax is levied in Latvia. The tax is levied on the cadastral value of the land, at 1.5%. Local authorities are allowed to grant discounts on this tax for certain taxpayers. Real estate tax paid is also deductible for income tax purposes if the real estate property is used for commercial purposes.

CORPORATE TAXATION

Income Tax

Corporate rental income is taxed at 15%, by withholding, levied on the gross amount.

Capital Gains

Capital gains are treated as ordinary income and are taxed at 15%. Taxable capital gains are generally computed as selling price less acquisition costs and other related costs.

Latvia - more data and information

• Guide to buying houses and registering property sales in Latvia

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